Beijing, March 22, China News Service—The central parity rate of Chinese yuan embraced the largest growth margin in the past three weeks. On March 22, China Foreign Exchange Trade System announced that the central parity rate of the RMB against the USD stood at 6.3167, which was an adjustment of 229 basis points compared to the previous trading day. The adjustment amounted to the highest level since February 27, 2018. 

　On the morning of March 22, the US Federal Reserve Board of Governors announced an increase of 25 basis points in interest. The USD Index then went down immediately, declining from 90 to around 89.5. By 11 a.m., March 22, it was reported to stand at 89.56.

The exchange rates of the onshore and offshore RMB against the USD witnessed slight rise amid fluctuation. By 11 a.m., March 22, their exchange rates were reported 6.3180 and 6.3139 respectively.

　Guo Jiayi, research analyst of China Industrial Bank, expressed that judged from the decision made by the Federal Open Market Committee (FOMC), the trajectory of raising interest in three consecutive years did not go beyond market expectations. In the short run, the USD Index will therefore face a downward pressure following the favorable news.

Proceeding from the medium-to-long term, though the Federal Reserve might launch a much steeper track of raising interest in the next two years, it cannot be confirmed at present and the market response is relatively tranquil. If the Federal Reserve is right about the inflation rally, the US economy will run the possibility of falling into a state akin to “stagflation” at the tail end of the cycle. As most non-US economies are experiencing initial tight monetary policy period, they will face a later inflation rally. Under such circumstance, even consecutive interest raise of the Federal Reserve will fail to reverse the flagging trend of the US dollar.

　Guo Jiayi also pointed out that the declining USD Index and the mild increase of the open market operation interest rate by the People’s Bank of China have given certain momentum for the RMB to appreciate. However, the motivation for blazing a trail of a new round of maker trend can hardly be noticed. In the short term, the exchange rate of the RMB against the USD still maintains a low fluctuation trend. (End)

Source: WWW.CHINANEWS.COM